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"We have been observing this market for a long time and we believe that now is a good time to make this step"
Herbert Stepic, Raiffeisen International |
"Due to its economic potential and politically stable environment, Kazakhstan is an attractive market," says Herbert Stepic, Raiffeisen International’s chief executive. "We have been observing this market for a long time and we believe that now is a good time to make this step."
Raiffeisen had previously hoped to crack the Kazakh banking market through BTA (formerly Bank TuranAlem) in which it built a 7.7% minority stake in 2001. But it failed to come to an agreement over an acceptable price for majority control and sold its holding in August 2006 to a group of Scandinavian investment funds led by East Capital, registering a €102 million profit in the process. In the interim it has concentrated on building its leasing business in the country, which is in the top three in a fast-growing market segment.
Raiffeisen is reported to have considered the purchase of stakes in several existing banks – including, ironically, BTA subsidiary Temirbank – but has concluded that an organic rather than an acquisition-led approach makes most sense. The new bank will be headquartered in the financial capital, Almaty, and, licensing approval permitting, will start operations in the first quarter of 2009. It will have a primary focus on servicing local and foreign corporates – the formula that has served Raiffeisen so well since it entered the emerging European banking markets in Hungary in 1987. A corporate focus will also entail fewer overheads, as Raiffeisen will only have to establish branches in the handful of big cities in Kazakhstan. The bank has earmarked an initial sum of €100 million to fund the first three years of operations. The addition of a Kazakh element will further cement Raiffeisen’s leading position in the Commonwealth of Independent States. It already ranks as the largest western banking group in Russia, Ukraine and Belarus. Arch-rival UniCredit recently completed the $2.1 billion purchase of ATF Bank, the fifth-largest bank in Kazakhstan. Other western banks with a presence in the country include ABN Amro, Citi and HSBC.
Despite the dramatic slowdown in banking sector growth because of the choking off of the supply of cheap foreign debt, the Kazakh sector continues to attract international capital from a variety of sources.
Recent transactions include the purchase of a 25% stake in number-two player Kazkommertsbank in June by Alnair Capital, a private equity group backed with capital from Abu Dhabi’s Sheikh Tahnoon Bin Zayed Al Nayhan, and the acquisition of a 30% stake in Bank CenterCredit, the sixth-largest bank in Kazakhstan, by Korea’s Kookmin Bank.
Seimar Alliance Financial Corporation, which controls 75% of number four bank Alliance Bank, has mandated Merrill Lynch and Credit Suisse to help it find a strategic partner that is willing to take a majority stake.
BTA is to decide by September whether or not to sell its Temirbank subsidiary. Earlier this year, BTA appointed Deutsche Bank to advise it on its options regarding Temirbank. If Temirbank is not sold, it is likely to be fully consolidated into BTA, which this year overtook Kazkommertsbank as the biggest bank by assets in the country.